It would appear that the Biden administration is throwing every policy issue they have left against the wall to see what sticks. The past two weeks have brought us the conservation rule imposed by the Bureau of Land Management (BLM). Then there were additional rules on the livestock identification issue, and we are still dealing with the uncertainty of the H5N1 bird flu. Now I hear there is a farm bill from the House that plans to spend over a trillion dollars.
Futures markets certainly don’t like the bird flu issue and are backing away from cattle markets. USDA is now testing lactating dairy cows being transported through other states; the flu has been found in nine states. USDA has been testing the milk supply, which is safe if pasteurized, and now they’re testing beef from dairy cow slaughter. Test results came in and confirmed no safety issues with ground beef from dairy cows. Once that news came out, futures markets jumped $3-4, go figure.
Live cattle futures markets have been in a tailspin with June live cattle losing $12 since mid-March. Traders are just staying away from this market, which really isn’t that uncertain. Cash fed cattle trade was strong a couple weeks ago, with total cash fed cattle volume at 93,000 head with an average price of $185.73. Trade a week ago was expected to be steady. There is a nice basis for hedged cattle feeders, which should motivate them to sell.
Packer losses are estimated to be a negative $90 per head. Packers have been unsuccessful at moving the Choice cutout higher; it should be advancing over the next two months, but it continues to go down. The last quote was $293.54. It’s been a mystery how packers will respond over the next few weeks. They are producing more beef, but they’re doing it with heavier cattle. Carcass weights are at a record-high 919 pounds.
Feeder cattle were noticeably lower in late April. The supply outside feedlots is much lower. Steer and heifer calves were having a harder time getting over $300, while heavier feeder-weight yearlings were lower as well. The CME Feeder Cattle Index was at $247.06. Cow-calf producers will be in the driver’s seat for a while. Other margin players in the cattle business will have some challenges going forward.
A couple weeks ago, BLM issued their final conservation rule. It wasn’t met with a lot of enthusiasm from resource users. They want to add conservation as a management tool to the Federal Land Policy and Management Act (FLPMA), which mandates multiple use management.
The troubling part of this rule is the conservation leases, which seems like it will be a more subjective rule decided upon by bureaucrats. Public lands grazers aren’t too happy with BLM. The House Committee on Natural Resources met recently on four bills that would force BLM to reconsider the conservation rule, along with delisting gray wolves in the lower 48 states.
The grazing industry sent a 23-page comment to BLM outlining the laws that BLM is circumventing, with over 60 farm and ranch groups signing on. They summed up their letter saying, “For generations, the cattle and sheep producers who are members of the undersigned organizations have worked with the BLM to manage hundreds of millions of acres across the United States for the benefit of the American people, the domestic food supply chain, ecosystem health, and all other public lands users. In one fell swoop, the BLM has proposed to upend that carefully cultivated balance, setting the stage for incremental reductions in grazing and access to federal lands. Through the proposed rule, BLM has set aside key obligations under (the Taylor Grazing Act), FLPMA, (National Environmental Policy Act), and other interagency consultation requirements, while simultaneously providing a framework to marginalize key partners. BLM has repeatedly offered that the proposed rule was intended to address a bevy of longstanding concerns from all multiple use groups, but the proposed rule falls short of the kind of certainty the coalition would expect from a proposed rule. The coalition recommends the agency reconsider the proposed rule to ensure that any final rule that may contain these concepts will truly be durable, effective, and protective of multiple use long into the future.”
It’s going to be an interesting few months before this election plays out. We have an administration that is out of control and trying to buy votes with your tax dollars. I expect we’ll see more rules and regulations thrown at us. It’s time for change, and as always, pray for more spring rain. — PETE CROW
